Why Should Taxpayers Give Big Banks $83 Billion a Year?

This is another article on the downside of “too big to fail.” After attaining “too big to fail” status, creditors know these banks will be bailed out by the U.S. government if and when they fail. As such creditors to these large banks have reduced risk exposure. According to the article, this amounts to about 0.8 percentage points or $83Billion a year that the top 10 banks save every year as a result of their “too big to fail” status.

Why not break these big banks up rather than letting them become too big and failing?

One thought on “Why Should Taxpayers Give Big Banks $83 Billion a Year?”

Breaking up the banks is a start, but it seems like a token gesture. The subsidy needs to stop altogether. That is the only way to shock them into taking any real action. Say I own (significant) shares of Bank of America stock. I read this article and see that 83 billion subsidy but as long as I’m getting my return, I’m not likely to care much. Say the subsidy stops or is greatly reduced, I’m getting less return and I’m going to bring pressure to bear on the officers.

The government needs to put the pressure on first and let the market do the rest. If the officers/managers do nothing to change things, I’m probably going to sell my stock. I sell my chunk of stock it’s going to drop the price of the stock. I sell, you sell, we all sell and the bank becomes insolvent. Cause and effect.

Unfortunately, so many of our politicians are corrupted by these banks, ironically through kick backs from these same subsidies, that the only way to get any real change going is to vote people into office who actually do their job. That requires voters to educate themselves….